Revolutionizing Healthcare: Pharmaceutical Companies Partner to Co-create Innovative Solutions for Humanity

According to Science Daily, the success rate of large, independent pharmaceutical corporations in creating new drugs has been declining. Approximately 60% of all new pharmaceuticals are developed due to mergers, acquisitions, and licensing of existing treatments.

Researchers may look for a future improvement in the industry’s inter-organizational transaction networks to raise R&D production now that the patterns in university spin-offs and investments in the United States and Europe have been exposed.

Because of the high expenditures and poor success rate of the research and development phase, bringing a novel medicine to market can take time and effort. In recent years, the pharmaceutical business has experienced remarkable development in foreign innovation. With a more excellent grasp of the biology of disorders, one may better employ scientific data in decision-making.  

A group of Japanese academics led by Associate Professor Kota Kodama of Ritsumeikan University investigates shifting trends in inter-organizational collaborations in the pharmaceutical business to increase R&D efficiency and medication development.

Increasing the number of start-up firms that emerge from universities and research institutions as participants in the source of innovation is what he refers to as a “game changer” for the network structure of innovation creation in the pharmaceutical industry.  

According to their findings, alliance networks are the most common approach to acquiring access to the specialist capabilities required for innovative drug development strategies. Over the last decade, large pharmaceutical companies focusing on research have typically relied on the following external innovation strategies: research collaborations, innovation incubators, academic centers of excellence, public-private partnerships, mergers and acquisitions (M&A), drug licensing, and corporate venture capital funds.

The authors hope that by documenting the evolution of these networks and the nature of their collaborations over the last decade, they will be able to provide valuable strategic insights to the pharmaceutical industry and academic institutions as they move forward in the field of drug discovery.  

To learn about patterns in developing new drugs for humans, researchers combed the Cortellis Competitive Intelligence database for nearly 50,000 deals related to pharmaceutical R&D across pharmaceutical, digital health software, animal drug, and medical device companies. They also noticed that the compound annual growth rate (CAGR) of 13 large pharmaceutical businesses with annual revenues surpassing US$10 billion has increased since 2015.

After 2015, researchers concluded that mergers and acquisitions play a significant influence in the expansion of large pharmaceutical firms’ bottom lines due to a rise in the CAGR and a substantial shift in M&A-related agreements.  

Furthermore, from 2012 to 2021, the annual growth rate of enterprises engaging in inter-organizational agreements was at a compound annual rate of 5%. While the number of companies participating and agreements are growing, the density of deal networks is falling yearly, showing that networks are becoming increasingly non-cohesive.

By 2017, new networks had emerged to connect previously isolated areas, and the network’s formerly focused business interactions among firms in specific places had diversified.

These traits are the outcome of the shift away from a system in which only the major pharmaceutical companies were responsible for drug research output. Interorganizational cooperation among a broader range of participants has recently enhanced the R&D productivity of new biotechnology and pharmaceutical enterprises.